Woman can be Karta of Family

CS(OS) 2011/2006 Page 1 of 27
$~R-11
*                                        IN THE HIGH COURT OF DELHI AT NEW DELHI
                                                          Reserved on: 14.12.2015
                                                        Pronounced on: 22.12.2015
                                                           + CS(OS) 2011/2006

MRS. SUJATA SHARMA ..... Plaintiff
Through: Ms. Mala Goel, Adv.
versus
SHRI MANU GUPTA ..... Defendant
Through: Mr. Aslam Ahmed, Mr. B.S. Jamwal &
Mr. Puneet Singh Bindra, Advocates fordefendant Nos.1 to 4Mr. B.K. Srivastava, Mr. Dinesh Kumar &
Mr. Roopak Gaur, Advocates fordefendant Nos.10 & 11.
CORAM:HON'BLE MR. JUSTICE NAJMI WAZIRINAJMI WAZIRI, J.

1. The issue which is to be decided in this case is whether the plaintiff,being the first born amongst the co-parceners of the HUF property, wouldby virtue of her birth, be entitled to be its Karta. Her claim is opposed bydefendants Nos. 1 to 4 while the defendants Nos. 5 to 9 have given their„no objection‟ to it and their „NOC‟ has been filed along with the plaint.Therefore, defendant Nos. 5 to 9 are virtually plaintiffs. Defendants No. 10and 1 1 state that their position is to be determined as per law.

Goel, the learned counsel for the plaintiff, submits that the parties to thesuit are the co-parceners of the D.R.Gupta & Sons, HUF.2. The suit property comprises residential property at 4, UniversityRoad, Delhi-110007 and some movable properties and shares such as (i)Shares of Motor and General Finance Ltd.; (ii) Deposits with Motor andGeneral Finance Ltd.; (iii) Bank of Account in Bank of India, Asaf AliRoad; and (iv) Bank Account in Vijaya Bank, Ansari Road.3. To determine the lis in this case, the following issues were framedvide order dated 15.09.2008:

1. Whether the suit has been valued properly and propercourt fee has been paid thereon? (OPP)

2. Whether the suit for declaration, is maintainable in itspresent form? (OPP)

3. Whether there exists any coparcenary property orHUF at all?(OPP)

4. Whether the plaintiff is a member of D.R. Gupta andSons HUF? And if so, to what effect? (OPP)

5. Whether the interest of the plaintiff separated upon thedemise of her father Sh. K.M. Gupta in 1984? (OPD)

6. Assuming existence of a D.R. Gupta and Sons HUF,whether the plaintiff can be considered to be an integralpart of the HUF, particularly after her marriage in 1977,and whether the plaintiff has ever participated in theaffairs of the HUF as a coparcener, and its effect? (OPP)

7. Assuming existence of D.R. Gupta and Sons HUF,whether the plaintiff is a coparcener of and legallyentitled to be the Karta?(OPP)

8. What is the effect of the amendment in the HinduSuccession Act, in 2005 and has it made any changes in

the concept of Joint Family or its properties in the law ofcoparcenary? (OPP)

9. Relief.

4. Issue 1This issue was decided in favour of defendant Nos. 1 to 4 by thisCourt, which was subsequently set aside in Appeal No.293/2010 on17.01.2013, therefore, this issue stands settled in favour of the plaintiff.

5. Issues No. 2, 3, 4 and 7.

Ms. Mala Goel, the learned counsel for the plaintiff submits thatpursuant to the Hindu Succession (Amendment) Act, 2005 (hereinafterreferred to as the „amended Act‟) which amended the Hindu SuccessionAct, 1956, all rights which were available to a Hindu male are now alsoavailable to a Hindu female. She submits that a daughter is nowrecognised as a co-parcener by birth in her own right and has the samerights in the co-parcenary property that are given to a son. She relies uponSection 6 of the Hindu Succession Act, 1956 which reads as under:

“6. Devolution of interest in coparcenary property. —(1) On and from the commencement of the HinduSuccession (Amendment) Act, 2005*, in a Joint Hindufamily governed by the Mitakshara law, the daughter ofa coparcener shall,—

(a) by birth become a coparcener in her own right inthe same manner as the son;

 Page 4 of 27(b) have the same rights in the coparcenary property asshe would have had if she had been a son;(c) be subject to the same liabilities in respect of thesaid coparcenary property as that of a son,and any reference to a Hindu Mitakshara coparcenershall be deemed to include a reference to a daughter ofa coparcener:Provided that nothing contained in this sub-sectionshall affect or invalidate any disposition or alienationincluding any partition or testamentary disposition ofproperty which had taken place before the 20th day ofDecember, 2004.

(2) Any property to which a female Hindu becomesentitled by virtue of sub-section (1) shall be held by her

with the incidents of coparcenary ownership and shallbe regarded, notwithstanding anything contained in this

Act or any other law for the time being in force in, asproperty capable of being disposed of by her bytestamentary disposition.

(3) Where a Hindu dies after the commencement of theHindu Succession (Amendment) Act, 2005*, his interestin the property of a Joint Hindu family governed by theMitakshara law, shall devolve by testamentary orintestate succession, as the case may be, under this Actand not by survivorship, and the coparcenary propertyshall be deemed to have been divided as if a partitionhad taken place and,—

(a) the daughter is allotted the same share as is allottedto a son;

(b) the share of the pre-deceased son or a pre-deceaseddaughter, as they would have got had they been alive atthe time of partition, shall be allotted to the survivingchild of such pre-deceased son or of such pre-deceaseddaughter; and

(c) the share of the pre-deceased child of a predeceasedson or of a pre-deceased daughter, as suchchild would have got had he or she been alive at thetime of the partition, shall be allotted to the child ofsuch pre-deceased child of the pre-deceased son or apre-deceased daughter, as the case may be.Explanation. —For the purposes of this sub-section, theinterest of a Hindu Mitakshara coparcener shall bedeemed to be the share in the property that would havebeen allotted to him if a partition of the property hadtaken place immediately before his death, irrespectiveof whether he was entitled to claim partition or not.(4) After the commencement of the Hindu Succession(Amendment) Act, 2005*, no court shall recognise anyright to proceed against a son, grandson or greatgrandsonfor the recovery of any debt due from hisfather, grandfather or great-grandfather solely on theground of the pious obligation under the Hindu law, ofsuch son, grandson or great-grandson to discharge anysuch debt:Provided that in the case of any debt contracted beforethe commencement of the Hindu Succession(Amendment) Act, 2005*, nothing contained in this subsectionshall affect—

(a) the right of any creditor to proceed against the son,grandson or great-grandson, as the case may be; or

(b) any alienation made in respect of or in satisfactionof, any such debt, and any such right or alienation shall

be enforceable under the rule of pious obligation in thesame manner and to the same extent as it would have

been enforceable as if the Hindu Succession(Amendment) Act, 2005 had not been enacted.

Explanation. —For the purposes of clause (a), theexpression “son”, “grandson” or “great-grandson”

shall be deemed to refer to the son, grandson or greatgrandson,as the case may be, who was born or adoptedprior to the commencement of the Hindu Succession(Amendment) Act, 2005*.

(5) Nothing contained in this section shall apply to apartition, which has been effected before the 20th day

of December, 2004.

Explanation. —For the purposes of this section“partition” means any partition made by execution of adeed of partition duly registered under the RegistrationAct, 1908 (16 of 1908) or partition effected by a decreeof a court.”

6. She also relies upon the dicta of the Supreme Court in TribhovanDas Haribhai Tamboli v. Gujarat Revenue Tribunal and Ors. AIR 1991SC 1538 which held that the senior most member in a HUF would becomethe Karta. The relevant portion of the above judgment is reproducedhereinunder:“The managership of the Joint Family Property goes to aperson by birth and is regulated by seniority and the Karta orthe Manager occupies a position superior to that of the othermembers. A junior member cannot, therefore, deal with thejoint family property as Manager so long as the Kartaavailable except where the Karta relinquishes his rightexpressly or by necessary implication or in the absence of theManager in exceptional and extra-ordinary circumstances suchas distress or calamity effecting the whole family and forsupporting the family or in the absence of the father whosewhereabouts were not known or who was away in remote placedue to compelling circumstances and that is return within thereasonable time was unlikely or not anticipated.”Ms. Mala Goel further relies upon the case of Ram Belas Singh vs.Uttamraj Singh and Ors. AIR 2008 Patna 8, which held as under. Thisjudgment deals with Section 6B of the Act:“9. The suit out of which this civil revision hasarisen had been filed in the year 2006 much after cominginto force of the Hindu Succession (Amendment) Act,2005 (Act XXXIX of 2005) which substituted Section 6 ofthe Act and provided that in a joint Hindu familygoverned by Mitakshara law the daughter of acoparcener shall by birth become a coparcener in herown right in the same manner as the son and will havethe same rights in the coparcenary property as she wouldhave if she had been a son and shall also be subject tothe same liabilities in respect of the said coparcenaryproperty as that of a son and any reference to a HinduMitakshara coparcener shall be deemed to include areference to a daughter of a coparcener. In the saidcircumstances, the law is made very clear that the term"Hindu Mitakshara coparcener" used in the originalHindu Law shall now include daughter of a coparceneralso giving her the same rights and liabilities by birth asthose of the son.”

7. The learned counsel for the plaintiff further submits that there isclear admission by the defendant No. 1 of the existence of the aforesaidHUF insofar as the said defendant, Manu Gupta, had written the letterdated 3.10.2006 (Ex.P-3) to the Military authorities/MukulGupta/defendant No.6 as Karta of the said HUF. This letter was writtenascertaining his right as the Karta of the HUF by virtue of being the eldestliving male member of the HUF; indeed, the said letter refers to theaforesaid HUF four times over. Similarly, identical letters have beenwritten on 08.09.2006 (Ex. P-4) to defendant No. 9, viz. Shri Bharat Gupta.The learned counsel also refers to Ex. PW3/C which is an extractfrom a note sheet. No. 36, Clause 2 whereof reads as under:

“(i) After perusing the record available in the fileit reveals that Bungalow No.4, University RoadKingsway Camp, Delhi admeasuring an area of 25750Sq. yards or 5.32 acres was held on Lease in Form „B‟ Cantt Court 1899 in Perpetuity dated 25.07.1906 dulyregistered as number 2239 Book No. 1 Vol. No. 615 on

pages 8 to 54 dated 31.08.1906 on payment of an annual rent of Rs.12/- in favour of Sh. D.R. Gupta, who died on 01.10.71.

(ii) The subject property has also been declared inthe name of HUF and mutated in favour of the LegalHeirs of Late Sh. D.R. Gupta namely (1) Sh. KishanMohan (2) Shri Mohinder Nath Gupta (3) Shri JatinderNath Gujpta (4) Shri Ravinder Nath Gupta and (5) Sh.Bhupinder Nath Gupta.(iii) The above named individuals have also beendeclared as joint owners of the Lease hold rights of thesubject property. Shri Kishan Mohan Gupta died on 17-2-1984 and names of his Legal Heirs have been

substituted in the names of his Legal Heirs have beensubstituted in the record of this office.In his deposition on 18.07.2013, PW-3, one Mr. N.V. Satyanarayan,Defence Estate Officer, Delhi Circle, has admitted that the mutation ofBungalow No. 4, University Road, Delhi had been done in the name ofShri R.N. Gupta (Karta); that it is borne out from the summoned record,i.e., a copy of the letter dated 01.06.85, addressed to Mrs. Shanta K.Mohan, w/o Late Sh. Kishan Mohan, 18, Anand Lok, New Delhi regardingmutation in the name of successor of Late Sh. Kishan Mohan, Karta(JHUF) in respect of 4, University Road, Delhi and letter dated 5.8.2003from his office addressed to Sh. R.N. Gupta (Karta) & others, 4, UniversityRoad, Delhi on the subject “Mutation of Bungalow No.4, University Road,Delhi in the name of Legal Heirs.” In this letter, it was contended that Mr.R.N. Gupta was the sole surviving son of Mr. D.R. Gupta and that he was

thus the Karta of the said JHUF.

8. It is not in dispute between the parties that the plaintiff is the eldestsurviving member of the HUF. Accordingly, she seeks a decree in termsof the relief sought in the suit.

9. The learned counsel for the plaintiff relies upon the case ofRaghunath Rai Bareja and Another vs. Punjab National Bank andOthers (2207) 2 SCC 230 which held that, under the Dayabhaga Schoolof Law, an unborn son cannot have a right in the property because the saidson cannot perform Shradha whereas, under the Mitakshara School ofLaw, an unborn son in the womb of his mother gets a share in the ancestral

property. The rights of an unborn son in the mother‟s womb under the

Dayabhaga School of Law are premised on the ability of the child to offera rice ball or to conduct such necessary rituals for the benefit of thedeparted souls of his ancestors. Under the Mitakshara School of Law,

emphasis is on the right of inheritance of the child and therefore, it restsupon consanguinity rather on upon the inheritance efficacy. It is contendedthat Section 6 of the Hindu Succession Act extends this element ofconsanguinity to female coparceners of a HUF under the MitaksharaSchool of Law to all aspects of inheritance, which would include the rightto manage a ritual or property as its Karta, being the eldest of the coparceners.

She submits that by virtue of the family settlement dated01.04.1999 (Ex. PW1/5), the rights of the parties, then existing, weresettled. It was agreed that:

“2. The parties hereto confirm and declare that theoral family settlement dated 18.01.1999 was arrived at on thefollowing terms:

2.1 The parties acknowledge and confirmed that the partieshereto are the members of the Hindu Undivided family D.R.Gupta and Sons (HUF) and each having share in themovable and immovable properties presently owned by theHindu Undivided Family as under:

(a)Shri Krishan Mohan Gupta (The eldest son of late ShriD.R. Gupta who died on 17th Feb., 1984) and is survived byhis wife Smt. Shanta K. Mohan And Mrs. Sujata Sharma &Mrs. Radhika Seth, daughter, heirs to the party of the “Firstpart” - 1/5th share.

(b) Shri Mahendra Nath Gupta as Karta (party of the

“Second part ) - 1/5th share

(c) Mr. Ravinder Nath Gupta (party of the Third part)- 1/5th share

(d) Shri Bhupinder Nath Gupta (party of the “Fourth)- 1/5th Share

(e) Mr. Jitender Nath Gupta (party of the “Fifth part”)- 1/5th share

2.2 The parties acknowledge and confirm that the HinduUndivided family owns and possesses the following movableand immovable properties.

(a) Bunglow No.4, Universtiy Road, Delhi.

(b) Share of Motor and General Finance Ltd. (4308shares)

(c) Bank account of Hindu Undivided family D.R. Gupta& Sons (HUF) with Bank of India, Asaf Ali Road, New Delhi.

(d) Bank account with Vijiya Bank, Ansari Raod, NewDelhi.

(e) Deposit with the Motor & General Finance Ltd. ofRs.6,400/- plus accumulated interest thereon.

2.3 The parties effected partition of Hindu Undividedfamily D.R. Gupta & Sons (HUF) and that the parties beingthe member of the said Hindu Undivided family were entitledto and were owners of the movable and immovable propertiesof the said Hindu Undivided family mentioned in para 2.2above to the extent as under:

a) Shri Krishan Mohan Gupta (The eldest son of late ShriD.R. Gupta, who died on 17th Feb. 1983) and is survived byhis wife Smt. Shanta K Mohan and Mrs. Sujata Sharma &Mrs. Radhika Seth, daughter, heirs to the party of the “Firstpart”. 1/5th share

b) Shri Mahendra Nath Gupta (as karta of the “Secondparty”) 1/5th share

c) Mr. Ravinder Nath Gupta (Party of the“Third part”) 1/5th share

d) Mr. Bhupinder Nath Gupta (Party of the“Fourth Part”) 1/5th share

e) Mr. Jitender Nath Gupta (Party of the“Fifth part”) 1/5th share

3. The Parties acknowledges that the party of the second,third, fourth, part are presently residing in the HinduUndivided family property No. 4, University Road, Delhi andthat they shall continue to reside therein till any three partiesherein jointly decide and convey their intention to the otherparties herein that the said property No. 4 University Road,Delhi be put to sale/development then the said property shallbe put up for sale/development immediately by all the parties.Party of the second, third and fourth part within six months

thereof and thereafter will vacate the said property.4. Sale or development of the said property would betaken up only if the total consideration is equal to or inexcess of Rs. 20 Crores. It was further agreed that out of thetotal consideration received, first one crore would be away at1/3rd each to the 3 parties two, three and four who areresiding on the premises towards relocation expenses and thebalance consideration then would be divided in five equalparts.It was further agreed that under the said family oral familysettlement, in the event the parties of the second, third andfourth part are desirous of purchasing the said property,either singly or jointly then the market value of the saidproperty shall be determined and the parties desirous ofpurchasing would be pay all the other parties who are sellingtheir share the value of their share as determined by themarket price of the said property. In case the purchase ismade by any one or two of the parties of the second, third &fourth part then the parties/party out of the 2nd, 3rd and 4thparties who are not the purchaser and are being asked tovacate the premises occupied by them would be paid theirshare of the relocation expenses as described in earlier inclause 4 of the agreement.

It was further under the said oral family settlement that tillsuch time that the permission of (sic.) competent authority tosubdivide or to construct the said property is received thetwo families who are not in occupation of the said propertywould not demand demarcation or setting aside of their sharein the property. However, once the permission to constructand subdivide is received then it would be their right todemand demarcation and possession of their share in thesaid property. In case on demarcation if anyh one(sic) or twoor all out of the 2nd, 3rd and 4th parties move out of theirpresent constructed portion that they are occupying, then the

affected party/parties would be paid relocation expenses asdescribed earlier in Clause 4 of the agreement. In such event,the parties 2, 3 & 4 will be aloowed a minimum, period of sixmonths to vacate the respective premises.”

10. The plaintiff is the daughter of Kishan Mohan Gupta, who is one ofthe acknowledged coparceners of the said HUF and was thus a party. Shehad signed the settlement as a member of the family and her signatureswould have to be read as one of the parties. Her signatures would testifythat she has a share in the property otherwise her signature would not benecessary.

11. Ms. Goel, the learned counsel, further submits that the share of aKarta is restricted by restraints placed upon the Karta inasmuch as norights can be created nor can the property be appropriated to the detrimentand exclusion of any of the co-parceners.

12. In the circumstances, issue Nos.2, 3, 4 and 7 are answered in theaffirmative in favour of the plaintiff.

12. On behalf of defendant Nos. 10 and 11, the learned counsel, Mr. B.K. Srivastava, submits in support of the plaintiffs claim, that the stipulation in Section 6(1) of the Hindu Succession Act,1946, which devolves interest in co-parcenary right, is clear and unambiguous and does not call for anyinterpretation; that any reference to Hindu Mitakshara Law would bedeemed to include a daughter with equal rights in the coparcenary, no otherview regarding succession is permissible in view of the overriding effect asper Section 4. For literal rule of interpretation, he relies upon the dicta ofthe Supreme Court in Raghunath Rai Bareja and Another vs. Punjab

National Bank and Others (2007) 2 SCC 230.

“40. It may be mentioned in this connection that thefirst and foremost principle of interpretation of a statutein every system of interpretation is the literal rule ofinterpretation. The other rules of interpretation e.g. themischief rule, purposive interpretation etc. can only beresorted to when the plain words of a statute are

ambiguous or lead to no intelligible results or if readliterally would nullify the very object of the statute.Where the words of a statute are absolutely clear andunambiguous, recourse cannot be had to the principlesof interpretation other than the literal rule,vide Swedish Match AB vs. Securities and ExchangeBoard, India, AIR2004 SC 4219. As held in PrakashNath Khanna vs. C.I.T. 2004 (9) SCC 686, the languageemployed in a statute is the determinative factor of thelegislative intent. The legislature is presumed to havemade no mistake. The presumption is that it intended tosay what it has said. Assuming there is a defect or anomission in the words used by the legislature, the Courtcannot correct or make up the deficiency, especiallywhen a literal reading thereof produces an intelligibleresult, vide Delhi Financial Corporation vs. Rajiv Anand 2004 (11) SCC 625. Where the legislative intentis clear from the language, the Court should give effectto it, vide Government of Andhra Pradesh vs. RoadRollers Owners Welfare Association 2004(6) SCC 210,and the Court should not seek to amend the law in thegrab of interpretation.”13. The learned counsel further relies upon Ganduri Koteshwar Ramma& Anr. v. Chakiri Yanadi & Anr., (2011) 9 SCC 788 which, in the context

of Section 6 of the Hindu Succession Act, held that rights in the coparcenaryproperty among male and female members of a joint Hindufamily are equal on and from 9.9.2005. He submits that the legislature has

now conferred a substantive right in favour of the daughters; that bySection 6, the daughter of the co-parcenar shall have same rights andliabilities in the co-parcenary property as she would if she had been a son;thus, on and from 9.9.2005, the daughter is entitled to a share in the HUFproperty and is a co-parcenar as if she had been a son. The Supreme Courtrelied upon its own judgment in S.Sai Reddy v. S. Narayana Reddy andOrs. (1991) 3 SCC 647 which held that the Hindu Succession Act was abeneficial legislation and had been placed on the statute book with theobjective of benefitting a woman‟s vulnerable position in society. Hence,the statute was to be given a literal effect. It is, however, required to benoted that the Court was then considering Section 29(a) of the Act and notSection 6.

14. The learned counsel for the defendant further submits that it isnecessary to take into consideration Section 29(a) of Hindu Succession(Andhra Pradesh Amendment) Act, 1986 which is para materia to Section6 of the Hindu Succession Act,1956. Therefore, the principle laid down inS.Sai Reddy v. S. Narayana Reddy and Ors. (supra) which is referred to inGanduri Koteshwar Ramma & Anr. v. Chakiri Yanadi & Anr. (supra)ought to be followed. Ergo, the right of the eldest male member of a coparcenaryextends to the female members also. In the present case insofaras the plaintiff is the eldest member of the co-parcenary, her being a femalecannot be seen a disqualification from being its Karta since thisdisqualification has been removed by the amendment brought about underSection 6 in the year 2005. It is further submitted that this Court inSukhbir Singh vs Gaindo Devi, RFA(OS)30/1974 (CM Application2730/2014) has held that Section 4 of the Hindu Succession Act,1956overrides all customs, texts, etc. to the extent that they provide anythingcontrary to what is contained in the Act.15. However, the learned counsel for defendant Nos. 1 to 4 submits thatsection 4 has to be read in the context in which it was enacted, i.e. onlythose customary rights have been overridden for which there is a specificprovision made in the Act; that Section 6 does not specifically refer to theexpression Karta of an HUF and that this right has to be gleamed from thetext in Hindu law. He also relied upon para 13 of the judgment inTribhovan Das Haribhai Tamboli v. Gujarat Revenue Tribunal and Ors.(supra) which reads as under:“13. In Raghavachariar's Hindu Law Principles and Precedents,Eighth Ed., 1987 in Section 275 at p. 239 stated thus:So long as the joint family remains undivided, the seniormember of the family is entitled to manage the familyproperties, and the father, and in his absence, the next seniormostmale member of the family, as its manager provided he isnot incapacitated from acting as such by illness or othersufficient cause. The father's right to be the manager of thefamily is a survival of the patria potestas and he is in all cases,naturally, and in the case of minor sons necessarily themanager of the joint family property. In the absence of thefather, or if he resigns, the management of the family propertydevolves upon the eldest male member of the family provided heis not wanting in the necessary capacity to manage it.”16. He submits that the S. Sai Reddy judgment only recognizes the rightof the eldest male member to be the Karta; that the amendment in 2005only recognized the rights of a female member to equal those of malemembers but it did not extend to granting them any right in themanagement of HUF property; that the Hindu Succession Act,1956 onlydeals with succession to the intestate properties of a Hindu and does notpurport to address the issue of the management of the estate.17. The learned counsel for the defendant Nos.1 to 4 further refers toparas 8 & 9 of the written statement regarding the powers and functions ofa Karta which are of wide amplitude. Finally, he submits that thelimitation apropos customs under Section 4 is not comprehensive. Hesubmits that Section 6 defines the rights only with respect to theinheritance of property and not its management; therefore, the undefinedrights will have to be gleaned from customs as well as from theinterpretation of ancient texts regarding Hindu religion. He submits thatinsofar as the right of management has not been specifically conferred on afemale Hindu, the customary practice would have to be examined. Insupport of his contention, the learned counsel relies upon the judgement ofthe Supreme Court in Badshah v. Urmila Badshah Godse & Anr. (2014) 1SCC 188, more particularly paras 13, 14, 16, 20 & 22. He also contendsthat the legislations regarding succession between Hindus were enacted forthe purpose of removing obstacles and enabling inheritance of property by

people with mental disabilities or injuries. Hence, the followingenactments were made:-

1. Hindu Inheritance Act, 1928

2. Hindu Law of Act, 1929

3. Hindu Amendment Right to Property Act, 1937

19. The learned counsel submits that even the Hindu Succession Act of

1956 has sought to remove the obstacles in the succession of intestateproperties between the Hindus. He submits that in accordance with theObjective of the Act, Section 24 was regarding inheritance of a remarried

widow (which has since been repealed), while Section 14 empowers afemale Hindu to have an absolute right in property possessed by her beforeor after the commencement of the said Act; therefore, that the Act never

intended to extend the right of a female coparcenor to the management of aHUF which, according to ancient Hindu text, vests in the eldest malemember of the coparcenary.

20. The learned counsel for defendant Nos. 10 and 11 promptly rebutsthis contention by referring to the objects and reasons of the HinduSuccession Act, 2005 which reads inter alia:-

“2. Section 6 of the Act deals with devolution of interest ofa male Hindu in coparcenary property and recognises the ruleof devolution by survivorship among the members of thecoparcener. The retention of the Mitakshara coparcenaryproperty without including the females in it means that thefemales cannot inherit in ancestral property as their malecounterparts do. The law by excluding the daughter fromparticipating in the coparcenary ownership not onlycontributes to her discrimination on the ground of gender butalso has led to oppression and negation of her fundamentalright of equality guaranteed by the Constitution having regard

to the need to render social justice to women, the States ofAndhra Pradesh Tamil Nadu, Karnataka and Maharashtrahave made necessary changes in the law giving equal right todaughters in Hindi Mitakshara coparcenary property. TheKerala Legislature has enacted the Kerala Joint HinduFamily System (Abolition) Act, 1976.

3. It is proposed to remove the discrimination ascontained in section 6 of the Hindu Succession act, 1956 by

giving equal rights to daughters in the Hindu Mitakasharacoparcenary property as the sons have. Section 23 of the Actdisentitles a female heir to ask for partition in respect of adwelling house wholly occupied by a joint family until themale heirs choose to divide their respective shares therein. Itis also proposed to omit the said section so as to remove thedisability on female heirs contained in that section.”

21. He also submits that there is a positive constitutional protection infavour of the women under Articles 14, 15 and 16 as well as in theDirective Principles for the State Policy.The effect of deletion of sub-Section 2 Section 4 of the unamendedAct has been enunciated in a judgment of this court in Nirmala & Ors. v.

Government of NCT of Delhi & Ors., ILR(2010)Supp.(1) Delhi413 para

13 of which reads as under:13. The relevant sections of the HSA are reproducedhereunder:Old Section 6 before substitution by the Amendment Act:6. Devolution of interest of coparcenary property.- When a male Hindu dies after the commencement of this Act, having atthe time of his death an interest in Mitakshara coparcenaryproperty, his interest in the property shall devolve bysurvivorship upon the surviving members of the coparcenaryand not in accordance with this Act:

PROVIDED that, if the deceased had left him surviving afemale relative specified in class I of the Schedule or a malerelative specified in that class who claims through such femalerelative, the interest of the deceased in the Mitaksharacoparcenary property shall devolve by testamentary or intestatesuccession, as the case may be, under this Act and not bysurvivorship.

Explanation I: For the purposes of this section, the interest ofHindu Mitakshara coparcener shall be deemed to be the sharein the property that would have been allotted to him if apartition of the property had taken place immediately before hisdeath, irrespective of whether he was entitled to claim partitionor not.

Explanation 2: Nothing contained in the proviso to this sectionshall be construed as enabling a person who has separatedhimself from the coparcenary before the death of the deceasedor any of his heirs to claim on intestacy a share in the interestreferred to therein." New Section 6after the Amendment Act:

6. Devolution of interest in coparcenary property.-(1) On andfrom the commencement of the Hindu Succession (Amendment)Act, 2005, in a Joint Hindu family governed by the Mitaksharalaw, the daughter of a coparcener shall,-

(a) by birth become a coparcener in her own right in the samemanner as the son;

(b) have the same rights in the coparcenary property as shewould have had if she had been a son;

(c) be subject to the same liabilities in respect of the saidcoparcenary property as that of a son, and any reference to aHindu Mitakshara coparcener shall be deemed to include areference to a daughter of a coparcener:

Provided that nothing contained in this Sub-section shall affector invalidate any disposition or alienation including anypartition or testamentary disposition of property which hadtaken place before the 20th day of December, 2004.

(2) Any property to which a female Hindu becomes entitled byvirtue of Sub-section (1) shall be held by her with the incidentsof coparcenary ownership and shall be regarded,notwithstanding anything contained in this Act, or any otherlaw for the time being in force, as property capable of beingdisposed of by her by testamentary disposition.

(3) Where a Hindu dies after the commencement of the HinduSuccession (Amendment) Act, 2005, his interest in the propertyof a Joint Hindu family governed by the Mitakshara law, shalldevolve by testamentary or intestate succession, as the casemay be, under this Act and not by survivorship, and thecoparcenary property shall be deemed to have been divided asif a partition had taken place and,-

(a) the daughter is allotted the same share as is allotted to ason;

(b) the share of the pre-deceased son or a pre-deceaseddaughter, as they would have got had they been alive at thetime of partition, shall be allotted to the surviving child of suchpre -deceased son or of such pre-deceased daughter; and(c) the share of the pre-deceased child of a pre-deceased son orof a pre-deceased daughter, as such child would have got hadhe or she been alive at the time of the partition, shall be allottedto the child of such pre-deceased child of the pre-deceased sonor a pre-deceased daughter, as the case may be. Explanation.-

For the purposes of this subsection, the interest of a HinduMitakshara coparcener shall be deemed to be the share in theproperty that would have been allotted to him if a partition ofthe property had taken place immediately before his death,irrespective of whether he was entitled to claim partition or not.(4) After the commencement of the Hindu Succession(Amendment) Act, 2005, no court shall recognise any right to

proceed against a son, grandson or great-grandson for therecovery of any debt due from his father, grandfather or greatgrandfathersolely on the ground of the pious obligation underthe Hindu law, of such son, grandson or great-grandson todischarge any such debt:

Provided that in the case of any debt contracted before thecommencement of the Hindu Succession (Amendment) Act,2005, nothing contained in this Sub-section shall affect-(a) the right of any creditor to proceed against the son,grandson or great-grandson, as the case may be; or(b) any alienation made in respect of or in satisfaction of, anysuch debt, and any such right or alienation shall be enforceableunder the rule of pious obligation in the same manner and tothe same extent as it would have been enforceable as if the

Hindu Succession (Amendment) Act, 2005 had not beenenacted.

Explanation.-For the purposes of Clause (a), the expression"son", "grandson" or "great-grandson" shall be deemed to referto the son, grandson or great-grandson, as the case may be,who was born or adopted prior to the commencement of theHindu Succession (Amendment) Act, 2005.(5) Nothing contained in this section shall apply to a partition,which has been effected before the 20th day of December, 2004.Explanation.-For the purposes of this section "partition" meansany partition made by execution of a deed of partition dulyregistered under the Registration Act, 1908 (16 of 1908) orpartition effected by a decree of a court.

Sections 8 and 9:8. General rules of succession in the case of males. - Theproperty of a male Hindu dying intestate shall devolveaccording to the provisions of this Chapter-

(a) firstly, upon the heirs, being the relatives specified in class Iof the Schedule;

(b) secondly, if there is no heir of class I, then upon the heirs,being the relatives specified in class II of the Schedule;

(c) thirdly, if there is no heir of any of two classes, then uponthe agnates of the deceased; and (d) lastly , if there is noagnate, then upon the cognates of the deceased.

9. Order of succession among heirs in the Schedule. -Amongthe heirs specified in the Schedule, those in class I shall takesimultaneously and to the exclusion of all other heirs; those inthe first entry in class II shall be preferred to those in thesecond entry; those in the second entry shall be preferred tothose in the third entry; and so on in succession.Ms. Mala Goel, the learned counsel for plaintiff refers to the samelocus classicus by Mulla on principles of Hindu laws which states asunder:

“By virtue of the new provision, a daughter of acoparcener in a joint Hindu family governed by theMitakshara law now becomes a coparcener in her own rightand thus enjoys rights equal to those hitherto enjoyed by a sonof a coparcener. The implications of this fundamental changeare wide. Since a daughter now stands on an equal footingwith a son of a coparcener, she is now invested with all therights, including the right to seek partition of the coparcenaryproperty. Where under the old law, since a female could notact as karta of the joint family, as a result of the newprovision, she could also become karta of the joint Hindufamily”

22. The learned counsel for the plaintiff further relies upon the 174thReport of the Law Commission of India, which has argued that whenwomen are equal in all respects of modern day life, there is no reason whythey should be deprived of the right and privilege of managing HUF astheir Karta. She argues that it is in this context, that Section 6 was soformulated that it covers all aspects of succession to a coparcener whichare available to a male member to be equally available to a female memberalso.

23. Insofar as the plaintiff father had passed away prior to the aforesaidamendment and there being no testamentary succession in her favour shewould not have any rights into the co-parcenary. Upon the query put tocounsel he submits that if the survivor of Mr. Krishan Mohan Gupta hadbeen male then he would have rights in the co-parcenary.

24. In the present case, the right of the plaintiff accrued to her upon thedemise of the eldest Karta. Indeed, there is a correspondence in this regardbetween her and the Land and Building Department. In any case, it is notdenied that she is the eldest of the co-parceners. By law, the eldest coparceneris to be karta of the HUF.

25. It is rather an odd proposition that while females would have equalrights of inheritance in an HUF property, this right could nonetheless becurtailed when it comes to the management of the same. The clear

language of Section 6 of the Hindu Succession Act does not stipulate anysuch restriction. Therefore, the submissions on behalf of defendant Nos. 1to 4 which are to the contrary are untenable.

26. In the case of Commissioner of Income Tax, Madhya Pradesh,Nagpur and Bhandara vs. Seth Govindram Sugar Mills, AIR 1966 SC24the Supreme Court had held that:

“The decision of the Orissa High Court in Budhi Jena v. DhobaiNaik followed the decision of the Madras High Court in V.M.N.Radha Ammal v. Commissioner of Income-tax, whereinSatyanarayana Rao J. observed :"The right to become a manager depends upon the fundamentalfact that the person on whom the right devolved was acoparcener of the joint family... Further, the right is confined tothe male members of the family as the female members were nottreated as coparceners though they may be members of the joint

family."

17. Viswanatha Sastri J. said :

"The managership of a joint Hindu family is a creature of lawand in certain circumstances, could be created by an agreementamong the coparceners of the joint family. Coparcenership is anecessary qualification for managership of a joint Hindufamily."

18. Thereafter, the learned judge proceeded to state :It will be revolutionary of all accepted principles of Hindu law to suppose that the senior most female member of a joint Hindufamily, even though she has adult sons who are entitled ascoparceners to the absolute ownership of the property, could bethe manager of the family... She would be guardian of herminor sons till the eldest of them attains majority but she wouldnot be the manager of the joint family for she is not acoparcener.

19. The view expressed by the Madras high Court inaccordance with well settled principles of Hindu law., whilethat expressed by the Nagpur High Court is in direct conflictwith them. We are clearly of the opinion that the Madras viewis correct.”

27. What emerges from the above discussion, is that the impedimentwhich prevented a female member of a HUF from becoming its Karta wasthat she did not possess the necessary qualification of co-parcenership.Section 6 of the Hindu Succession Act is a socially beneficial legislation; itgives equal rights of inheritance to Hindu males and females. Its objectiveis to recognise the rights of female Hindus as co-parceners and to enhancetheir right to equality apropos succession. Therefore, Courts would beextremely vigilant apropos any endeavour to curtail or fetter the statutoryguarantee of enhancement of their rights. Now that this disqualification hasbeen removed by the 2005 Amendment, there is no reason why Hinduwomen should be denied the position of a Karta. If a male member of anHUF, by virtue of his being the first born eldest, can be a Karta, so can afemale member. The Court finds no restriction in the law preventing theeldest female co-parcener of an HUF, from being its Karta. The plaintiff‟sfather‟s right in the HUF did not dissipate but was inherited by her. Nordid her marriage alter the right to inherit the co-parcenary to which shesucceeded after her father‟s demise in terms of Section 6. The saidprovision only emphasises the statutory rights of females. Accordingly,issues 5, 6 and 8 too are found in favour of the plaintiff.29. In these circumstances, the suit is decreed in favour of the plaintiffin terms of the prayer clause, and she is declared the Karta of „D.R. Gupta

& Sons (HUF)‟.

30. Decree sheet be drawn up accordingly.

31. The suit is disposed off in the above terms.NAJMI WAZIRI, J

Documents of which registration is compulsory in India

17. Documents of which registration is compulsory.- (1) The following documents shall be registered, if property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, or the Indian Registration Act 1871, or the Indian Registration Act, 1877 or this Act came or comes into force, namely :

(a) instruments of gift of immovable property ;

(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property ;

(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of such right, title or interest ; and

(d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent ;

(e) non-testamentary instruments transferring or assiging any decree or order of a Court or any award when such decree order or award purports or operates to create, declare,assign, limit or extinguish whether in present or in furture any right, title or interest, whether vested or contigent, of the value of one hundred rupees and upwards, to or in immovable property :

Provided that the State Government may, by order published in the official Gazette exempt from the operation of this sub-section any leases executed in any district or part of a district the terms granted by which do not exceed five years and annual rent reserved by which do not exceed fifty rupees.

1[(1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the transfer of Property Act, 1882(4 of 1882), shall be registered if they have been executed on or after the commencement of the Registration and Other Related laws (Amendment) Act, 2001, and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53A.]

(2) Nothing in clauses (b) and (c) of sub-section (1) applies to -

(i) any compostion deed ; or

(ii) any instrument relating to shares in a Joint Stock Company, notwithstanding that assests of such Company consist in whole or in part of immovable property ; or

(iii) any debenture issued by any such Company and not creating, declaring, assigning, limiting or extinguishing any right,title or interest, to or in immovable property except in so far as it entitles the holder to the security afforded by a registered instrument whereby the Company has mortgaged, conveyed or otherwise transferred the whole or part of its immovable property or any interest therein to trustees upon trust for the benefit of the holders of such debentures ; or

(iv) any endorsement upon or transfer of any debenture issued by any such company ; or

(v) 2 [any document other than the documents specified in sub section (1A)] not itself creating, declaring, assigning, limiting or extinguishing, any right, title or interest of the value of one hudred rupees and upwards, to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign,limit or extinguish any such right, title or interest ; or

(vi) any decree or order of a Court except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject matter of the suit or proceeding ; or

(vii) any grant of immovable property by the Government ; or

(viii) any instrument of partition made by a revenue officer ; or

(ix) any order granting a loan or instrument of collateral security granted under the Land Improvement Loans Act 1871, or the Land Improvement Loans Act, 1883 ; or

(x) any order granting a loan under the Agriculturists Loans Act, 1884, or instrument for securing the Repayment of a loan made under that Act ; or

(x-a) any order made under the Charitable>

(xi) any endoresement on a mortgage deed acknowledgeing the payment of the whole or any part of the mortgage money, and any other receipt for payment of money due under a mortgage when the receipt does not purport to extinguish the mortgage ; or

(xii) any certificate of sale granted to the purchaser of any property sold by public auction by a Civil or Revenue Officer.

Explanation. - A document purporting or operating to effect a contract for the sale of immovable property shall not be deemed to require or ever to have required registration by a reason only of the fact that such document contains a recital of the payment of any earnest money or of the whole or any part of the purchase money.

(3) Authorities to adopt a son, executed after the first day of January 1872, and not conferred by a will, shall also be registered.

1&2. Ins. By the Registration and Other Related Laws (Amendment) Act,2001,sec.3.

18. Documents of which registration is optional.- Any of the following documents may be registered under this Act, namely;

(a) instruments (other than instruments of gift and wills) which purport or operate to create, declare, assign limit or extinguish whether in present or in future, any right, title or interest whether vested or contingent, of a value less than one hundred rupees, to or in immovable property ;

(b) instruments acknowledging the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest ;

(c) leases of immovable property for any term not exceeding one year, and leases exempted under section 17 ;

(cc) instruments transferring or assigning any degree or order of a Court or any award when such decree or order or award purports or operate to create, declare assign, limit or extinguish, whether in present or in future, any right, title or interest, vested or contingent of a value less than one hundred rupees, to or in immovable property ;

(d) instruments (other than wills) which purport or operate to create, declare, assign, limit or extinguish any right, title or interest to or in movable property;

(e) wills ; and

(f) all other documents not required by section 17 to be registered.

 

Law of Dissolution of firm in India

39. Dissolution of a firm- The dissolution of partnership between all the partners of a firm is called the “dissolution of the firm”.

40. Dissolution by Agreement- A firm may be dissolved with the consent of all the partners or in accordance with a contract between the parties.

41. Compulsory dissolution- A firm is dissolved-

(a) by the adjudication of all the partners or of all the partners but one as insolvent, or

(b) by the happening of any event which makes it unlawful for the business of the firm to be carried on or for the partners to carry it on in partnership;

Provided that, where more than one separate adventure or undertaking is carried on by the firm, the illegality of one or more shall not of itself cause the dissolution of the firm in respect of its lawful adventures and undertakings.

42. Dissolution on the happening of certain contingencies- Subject to contract between the partners a firm is dissolved-

(a) if constituted for a fixed term, by the expiry of that term;

(b) if constituted to carry out one or more adventures or undertakings, by the completion thereof.

(c) by the death of a partner; and

(d) by the adjudication of a partner as an insolvent.

43. Dissolution by notice of partnership at will- (1) Where the partnership is at will, the firm may be dissolved by any partner giving notice in writing to all the other partners of his intention to dissolve the firm.

(2) The firm is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of communication of the notice.

44. Dissolution by the Court- At the suit of a partner, the Court may dissolve a firm on any of the following grounds, namely:-

(a) that a partner has become of unsound mind, in which case the suit may be brought as well by the next friend of the partner who has become of unsound mind as by any other partner;

(b) that a partner, other than the partner suing, has become in any way permanently incapable of performing his duties as partner;

(c) that a partner, other than the partner suing, is guilty of conduct which is likely to affect prejudicially the carrying on of the business, regard being had to the nature of the business.

(d) That a partner, other than the partner suing, willfully or persistently commits breach of agreements relating to the management of the affairs of the firm or the conduct of its business, or otherwise so conducts himself in matters relating to the business that it is not reasonably practicable for the other partners to carry on the business in partnership with him;

(e) That a partner, other than the partner suing, has in any way transferred the whole of his interest in the firm to a third party, or has allowed his share to be charged under the provisions of Rule 49 of Order XXI of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908); or has allowed it to be sold in the recovery of arrears of land revenue or of any dues recoverable as arrears of land revenue due by the partner.

(f) That the business of the firm cannot be carried on save at a loss; or

(g) On any other ground which renders it just and equitable that the firm should be dissolved.

45. Liability for acts of partner done after dissolution- (1) Notwithstanding the dissolution of a firm, the partners continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm if done before the dissolution, until public notice is given of the dissolution;

Provided that the estate of a partner who dies, or who is adjudicated an insolvent, or of a partner who not having been known to the person dealing with the firm to be a partner, retires form the firm, is not liable under this section for acts done after the date on which he ceases to be a partner.

(2) Notices under sub-section (1) may be given by any partner.

After dissolution of partnership, no partner, no partner is privy to other. Suit by one will not operate as resjudicata on the other.

46. Rights of partners to have business wound up after dissolution- On the dissolution of a firm every partner or his representative is entitled, as against all the other partners of their representatives, to have the property of the firm, applied in payment of the debts and liabilities of the firm and to have the surplus distributed among the partners or their representatives according to their rights.

47. Continuing authority of partners for purposes of winding up- After the dissolution of a firm the authority of each partner to bind the firm, and the other mutual rights and obligations of the partners, continue notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the firm and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise:

Provided that the firm is in no case bound by the acts of a partner who has been adjudicated insolvent; but this proviso does not affect the liability of any person who has after the adjudication represented himself or knowingly permitted himself to be represented as a partner of the insolvent.

48. Mode of settlement of accounts between partners- In settling the accounts of a firm after dissolution, the following rules shall, subject to agreement by the partners, be observed:-

(a) Losses, including deficiencies of capital, shall be paid first out of profits, next out of capital, and lastly, if necessary, by the partners individually in the proportions in which they were entitled to share profits;

(b) The assets of the firm, including any sums contributed by the partners to make up deficiencies of capital, shall be applied in the following manner and order:-

(i) in paying the debts of the firm to third parties;

(ii) in paying to each partner rateably what is due to him from the firm for advances as distinguished from capital.

(iii) in paying to each partner rateably what is due to him on account of capital; and

(iv) the residue, if any, shall be divided among the partners in the proportion in which they were entitled to share profits.

49. Payment of firm debts and of separate debts- Where there are joint debts due from the firm, and also separate debts due from any partner, the property of the firm shall be applied in the first instance in payment of the debts of the firm, and, if there is any surplus, then the share of each partner shall be applied in payment of his separate debts or paid to him. The separate property of any partner shall be applied first in the payment of his separate debts, and the surplus (if any) in the payment of the debts of the firm.

50. Personal profits earned after dissolution- Subject to contract between the partners, the provisions of clause (a) of section 16 shall apply to transactions by any surviving partner or by the representatives of a deceased partner, undertaken after the firm is dissolved on account of the death of a partner and before its affairs have been completely wound up:

Provided that where any partner or his representative has bought the goodwill of the firm, nothing in this section shall affect his right to use the firm name.

51. Return of premium on premature dissolution- Where a partner has paid a premium on entering into partnership for a fixed term and the firm is dissolved before the expiration of that term otherwise than by the death of a partner, he shall be entitled to repayment of the premium or of such part thereof as may be reasonable, regard being had to the terms upon which he became a partner and to the length of time during which he was a partner, unless-

(a) the dissolution is mainly due to his own misconduct, or

(b) the dissolution is in pursuance of an agreement containing no provision for the return of the premium or any part of it.

52. Rights where partnership contract is rescinded for fraud or misrepresentation- Where a contract creating partnership is rescinded on the ground of the fraud or misrepresentation of any of the parties thereto, the party entitled to rescind is, without prejudice to any other right, entitled-

(a) to a lien on, or a right of retention of, the surplus or the assets of the firm remaining after the debts of the firm have been paid, for any sum paid by him for the purchase of a share in the firm and for any capital contributed by him;

(b) to rank as a creditor of the firm in respect of any payment made by him towards the debts of the firm; and

(c) to be indemnified by the partner or partners guilty of the fraud or misrepresentation against all the debts of the firm.

53. Right to restraint from use of firm name or firm property- After a firm is dissolved, every partner or his representative may, in the absence of a contract between the partners to the contrary, restrain any other partner or his representative from carrying on a similar business in the firm name or from using any of the property of the firm for his own benefit, until the affairs of the firm have been completely wound up:

Provided that where any partner or his representative has bought the goodwill of the firm, nothing in this section shall affect his right to use the firm name.

54. Agreements in restraint of trade- Partners may, upon or in anticipation of the dissolution of the firm, make an agreement that some or all of them will not carry on a business similar to that of the firm within a specified period or within specified local limits; and notwithstanding anything contained in Section 27 of the Indian Contract Act, 1872 (9 of 1872), such agreement shall be valid if the restrictions imposed are reasonable.

55. Sale of goodwill after dissolution- (1) in settling the accounts of a firm after dissolution, the goodwill shall, subject to contract between the partners, be included in the assets, and it may be sold either separately or along with other property of the firm.

(2) Rights of buyer and seller of goodwill- Where the goodwill of a firm is sold after dissolution, a partner may carry on a business competing with that of the buyer and he may advertise such business, but, subject to agreement between him and the buyer, he may not-

(a) use the firm name,

(b) represent himself as carrying on the business of the firm, or

(c) solicit the custom of persons who were dealing with the firm before its dissolution.

(3) Agreement in restraint of trade- Any partner may, upon the sale of the goodwill of a firm, make an agreement with the buyer that such partner will not carry on any business similar to that of the firm within a specified period of within specified local limits, and notwithstanding anything contained in Section 27 of the Indian Contract Act, 1872, (9 of 1872), such agreement shall be valid if the restrictions imposed are reasonable.